Economics Financial Crisis

The Mechanics of the Market Versus the Morality of the Market

[digg-reddit-me]A rough draft of a thought:

There is a substantial difference in how many people view the market today that this financial crisis has brought out into the open. Some view the market primarily in moral terms – on both the left and right. Others view the market in mechanistic terms.

You can see this in the opposition of some extremists to any type of stimulus at all – believing that the market is sacred and the government an often unnecessary evil interfering in the market. You can see this in those on the left who believe the market creates fundamentally unfair situations or fundamentlly unjust processes. You can see this in the outrage many people feel at bailing out bankers, borrowers, shareholders – or anyone. In essence, those who view the market in moral terms tend to fall in two camps:

  1. Those who see blame our current crisis on the perversion of capitalist values, as people neglected to save, were pressured by the government to make bad loans, borrowed too much, were rewarded for short-term success, etcetera. (Capitalist values here mean a combination of Max Weber’s Protestant Work Ethic – diligence, hard work, and restrained expenditure among others – and libertarian values – freedom from government interference or coercion among others.)
  2. Those who see the roots of our current crisis extending back many years and blame it on the fact that capitalist values are perversions themselves. (Some of these thinkers focus on ends; the others on means. Income inequality and pollution are important issues for those who focus on ends. Government corruption by big business is a major issues for those who focus on means. These people see capitalist values as greed, selfishness, exploitation, social Darwinisn – all of which pervert our society and individual nature.)

I’m not sure everyone – or even most people – consciously take any of these positions, and I’m sure most people have contradictory perceptions. But those on the left and the right with strong opinions seem to fall comfortably in one camp or another.

On the other hand are those who see our economy as a machine. Specifically, this machine can be seen to produce something of great worth: increasing opportunity which is considered the main guarantee of societal stability. The question for those who take this approach to the economy primarily is, ‘How do we fix this?’ There is little worry about helping ‘losers’ and those who did wrong; there is no attempt to overthrow the entire capitalist system. Instead of treating the economic theory as a theological matter, they treat it as a mechanical matter. Something is gumming up the works; something is out of place. A mechanic doesn’t make a moral judgment about whether a cog or spring is doing it’s job – he does what he needs to do to get the machine running again.

As with the two types of moral judgments, many of those who are tackling this issue from a mechanical perspective also probably have moral opinions about what is going on. But they believe that fixing the machine is more important than judging who has sinned. Thus they pump money into banks that acted badly; they help bail out car companies that have been managed poorly; they help those homeowners who agreed to bad loans.

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